SRCL fails in tender case and “hurt NHS”

A case against NHS England for allegedly accepting an “abnormally low” offer as part of a contract for clinical waste disposal services in a case brought by SRCL has been dismissed in a High Court judgment.

NHS England (NHSE) was also cleared of any wrongdoing on how costs of the contract were calculated.

The case was brought by healthcare waste and compliance service provider, SRCL against the National Health Service Commissioning Board (also known as NHS England). It was heard in the High Court on days in June 2018 with a final ruling on 27 July 2018.

After the hearing and judgment (which are summarised below) NHSE told letsrecycle.com that the case highlighted a “striking example of taxpayers being asked to pay over the odds for a much needed service”.

A spokesperson for SRCL said the company has “reviewed the court’s judgment and intends to appeal”.

SRCL said in its complaint issued in June 2017 that NHSE acted in breach of the Public Contracts Regulations 2015 when it failed to require the winning bidder, Healthcare Environmental Services (HES), to “explain the prices proposed in its winning bid”, and that if it had, then it would have had to be rejected under EU law for public tenders.

If NHSE had done so, according to the complaint, the contract would have been awarded to SRCL as both of the two lowest bids wouldn’t have met the obligations set out.

SRCL also said had NHSE price-checked the winning bid, it would have prevented HES and the second highest bidder from “fulfilling its commitments made in the quality section of the tender evaluation”.

NHSE explained to the court that while it accepts that these are the issues at hand, it refutes them and also conducted an internal investigation which found no wrong-doing.

The auction process for the contract in questions began in April 2017. The nationwide contract was split into six ‘waves’ based geographically, which according to court documents “was for NHSE to obtain lower prices through more effective competition”.

According to the ruling, the contract auction was held online for all waves, with companies bidding the lowest possible amount they would charge for the service and the lowest company would win the contract. This method is called an e-auction and was introduced for these contracts to achieve the “lowest possible price”.

SRCL, according to the court documents, had won “some of the other lots in waves 1-5” but complained about the process in wave 6, which covers GPs and pharmacies in Cumbria and the North East of England.

In the auction for Wave 6, according to the court documents, the final bid by HES was £310,000. The next lowest bidder was £313,000, from Sharpsmart. SRCL submitted only one bid early in the auction, of £479,999, and then stopped bidding.

The judge cleared NHSE of any wrongdoing, as well as rejecting requests to keep aspects of the trial confidential.

“The tender bid by HES which won the auction was not abnormally low, and any further explanation by HES would have further demonstrated that. Even if it were, NHSE would not have been required to reject the bid as a matter of law,” the judge concluded.

Simon Stevens, chief executive of NHS England, said in a statement to letsrecycle.com that the “common sense judgment” is welcomed.

“The NHS has to be a wise steward of taxpayers’ money, and sometimes that means taking on vested interests,” he explained.

Mr Stevens added: “This case was a striking example where taxpayers were being asked to pay over the odds for a much needed service in order the fill the coffers of a private company. So we welcome the common sense judgement by the courts in favour of the NHS.”

MRW go further, to report that Stericycle has been found by a High Court judge of “contriving” a legal challenge against NHS England’s decision to award a clinical waste disposal contract to a competitor, which had put in a substantially cheaper offer.

The case was brought by SCRL, which has since rebranded as Stericycle, after it lost a contract to provide clinical waste services to GPs and pharmacies in Cumbria and north-east England in April 2017.

NHS England awarded the contract to Healthcare Environmental Services (HES), which put in a bid of £310,000 against SRCL’s £479,999 on the sixth ‘wave’ of bidding for services. This was conducted by auction to encourage bidders to lower their prices.

The judge said that materials shown to the court included those from an SRCL meeting at which terms used included, “keep price high in the Wave …” and “benefit the competition but hurt NHSE”.

 

 

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